NOC admits flouting law in contract award to Birat Oil

KATHMANDU, Nov 5: Nepal Oil Corporation (NOC) Managing Director Gopal Bahadur Khadka has boldly admitted that NOC unlawfully awarded a petroleum supply contract to Birat Oil.

Breaching existing laws, NOC issued Rs 200 million to Birat Oil to open a letter of credit (LC) for importing petroleum products into Nepal. Moreover, the agreement entered into with the company is such that the state-owned fuel monopoly has to purchase from Birat Oil at a highly inflated rate.

SUJAN DHUNGANA
KATHMANDU, Nov 5
Nepal Oil Corporation (NOC) Managing Director Gopal Bahadur Khadka has boldly admitted that NOC unlawfully awarded a petroleum supply contract to Birat Oil.
Breaching existing laws, NOC issued Rs 200 million to Birat Oil to open a letter of credit (LC) for importing petroleum products into Nepal. Moreover, the agreement entered into with the company is such that the state-owned fuel monopoly has to purchase from Birat Oil at a highly inflated rate.
“The process of awarding the contract was unlawful but we will continue to import fuel in this manner,” Khadka said at the meeting of the Committee on Commerce, Industries and Consumer Welfare Relations on Thursday. “This process had to be adopted as it is impossible to import petroleum products through existing legal provisions,” he added.
Altogether 22 domestic and international firms had responded after NOC sought Expression of Interest (EoI) last month for suppling petroleum products to Nepal, but Khadka had acted independently and given the contract to Birat Oil.
More importantly, NOC is purchasing the petroleum products supplied by Birat Oil at the much higher rate of Rs 199 per liter of petrol and Rs 187 per liter of diesel. Birat Oil is bringing petrol and diesel from Siliguri, West Bengal where petrol costs Indian Rs 66.11 (Rs 105.77) and diesel Indian Rs 49.55 (Rs 79.28). As NOC is also paying customs duty, the petrol and diesel seem to cost even higher than the rates at which NOC purchases from Birat Oil.
As per calculations by a top NOC official, Birat Oil stands to rake in a net profit of Rs 40 million without having to make any significant investment.
Informing that Birat Oil was the lowest bidder and the other proposals failed to meet the criteria, Khadka said, “Forget about the price and legal provisions; NOC has been authorized to import fuel and ease the ongoing crisis at any cost. We have been acting accordingly.”
NOC sources have said 25 tankers from Birat Oil will enter the capital soon.
During the meeting, committee members had asked Khadka if he was above the law. In response, Khadka said that importing petroleum products at any cost was the need of the hour.
Meanwhile, Naindra Prasad Upadhaya, secretary at the Ministry of Commerce and Supplies (MoCS), said that the deteriorating supply situation in the market is the result of a lack of coordination between the government bodies themselves. “We lack coordination among our own bodies. There is a tendency of one body to not heed the directives of another body,” Upadhaya said, adding, “As supply is below 15 percent of demand, such tendencies will worsen the situation further.”

"The process of awarding the contract was unlawful but we will continue to import fuel in this manner," Khadka said at the meeting of the Committee on Commerce, Industries and Consumer Welfare Relations on Thursday. "This process had to be adopted as it is impossible to import petroleum products through existing legal provisions," he added.

Altogether 22 domestic and international firms had responded after NOC sought Expression of Interest (EoI) last month for suppling petroleum products to Nepal, but Khadka had acted independently and given the contract to Birat Oil.

More importantly, NOC is purchasing the petroleum products supplied by Birat Oil at the much higher rate of Rs 199 per liter of petrol and Rs 187 per liter of diesel. Birat Oil is bringing petrol and diesel from Siliguri, West Bengal where petrol costs Indian Rs 66.11 (Rs 105.77) and diesel Indian Rs 49.55 (Rs 79.28). As NOC is also paying customs duty, the petrol and diesel seem to cost even higher than the rates at which NOC purchases from Birat Oil.

As per calculations by a top NOC official, Birat Oil stands to rake in a net profit of Rs 40 million without having to make any significant investment.

Informing that Birat Oil was the lowest bidder and the other proposals failed to meet the criteria, Khadka said, "Forget about the price and legal provisions; NOC has been authorized to import fuel and ease the ongoing crisis at any cost. We have been acting accordingly."

NOC sources have said 25 tankers from Birat Oil will enter the capital soon.

During the meeting, committee members had asked Khadka if he was above the law. In response, Khadka said that importing petroleum products at any cost was the need of the hour.

Meanwhile, Naindra Prasad Upadhaya, secretary at the Ministry of Commerce and Supplies (MoCS), said that the deteriorating supply situation in the market is the result of a lack of coordination between the government bodies themselves. "We lack coordination among our own bodies. There is a tendency of one body to not heed the directives of another body," Upadhaya said, adding, "As supply is below 15 percent of demand, such tendencies will worsen the situation further."